The Government announced way back in 2016, that it intended to legislate to ban the practice of charging fees to tenants when they apply to rent a property.
Whatever you think of the proposed ban (and actually we believe tenants should be asked to pay their fair share of tenancy costs and referencing charges), the legislation has been grinding slowly through Parliament and the House of Lords. It is due to come into effect at some time in 2019 – possibly as early as April.
The Government has proposed some late final amendments to the Tenant Fees Bill, while it was being debated in the House of Lords. The main amendments which unfortunately all adversely affect landlords are:
1. The maximum security deposit that can be charged to the tenant(s), to be held on account of end of tenancy dilapidations or damage, will be limited to five weeks’ rent – rather than the current norm of holding a deposit equivalent to six weeks’ rent.
2. The so-called permitted fee payments, where costs arise from the fault or carelessness of a tenant, will be limited to instances where tenants have lost a key or other security device, or where a tenant is at least two weeks late in paying their rent.
3. Landlords and agents will be allowed to take only one holding deposit for a property, to ‘reserve it’ while the tenant is being referenced and the tenancy paperwork is being completed.
The most important of these changes impacting Landlords, is likely to be the restriction on the size of the security deposit which can be taken in case of damages or dilapidations at the property. We believe that 6 weeks rent deposit is the minimum that a Landlord should reasonably require. Costs can quickly mount up if the property is left in a dirty state or if carpets and fittings are damaged.
To ensure that our Landlords are not disadvantaged by this new Government restriction, we are introducing the option of a ‘nil deposit’ insurance scheme for our Landlords properties.
Source – Clarkes Estates.